The Quick Read: Usually banks, credit unions and mortgage companies, and a mortgage broker can arrange one through wholesale lenders. No government office hands you the cash. Private lenders make the loan, and agency rules (Fannie Mae, Freddie Mac, FHA and VA) set the guardrails. Most conventional cash-out loans stop at 80% of your home’s value, so how much you can borrow depends on the equity you hold.
Who Actually Makes a Cash-Out Refinance Loan?
Five kinds of businesses offer it: banks, credit unions, mortgage companies, online lenders and mortgage brokers. The loan is the same product at each. What differs is the number of programs on offer, how the file is handled, and who you talk to.
Cash-out refinance estimate
The starting figures are an example value with a balance and a cash request in proportion. Replace them with yours.
Editable benchmark: 7.18% as of November 5, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the agency cap on a one-unit principal residence, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a cash-out refinance quote; a cash-out loan is priced by the lender at lock. The cash available is the loan the program cap allows less the balances paid off, before closing costs, which are not included. The HELOC line is the program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages.
| Who offers it | What they do | Trade-off |
|---|---|---|
| Banks | Lend from their own funds or sell the loan | Often one set of programs |
| Credit unions | Lend to members | Membership needed; fewer loan types |
| Mortgage companies | Specialize in home loans | Programs vary by company |
| Online lenders | Take applications digitally | Less hands-on guidance |
| Mortgage brokers | Shop the file across wholesale lenders | Broker arranges; the lender decides |
A broker does not lend. Lendmire works this way: it arranges loans through wholesale lenders and compares programs for you. The lender still reviews the file and makes the credit decision. Every program figure below is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Here is the practical point. Equity is what you are borrowing against, and limits differ by lender and program. A broker’s value is in matching your file to the program that fits it. That might be a conventional loan, an FHA loan or a VA loan, depending on the loan you hold now and your own eligibility.
What Is a Cash-Out Refinance, Exactly?
A cash-out refinance replaces your current mortgage with a new, larger one. The new loan pays off the old balance, and you keep the difference as cash. One loan goes away and one comes in.
That makes it different from a home equity loan or a home equity line of credit (HELOC). Those sit next to your first mortgage as a second loan. A cash-out refinance swaps the first mortgage itself.
Lendmire’s cash-out refinance programs page lays out the loan types side by side. In short, you borrow against your equity, the new loan sets the leverage, and the cash is whatever remains after the old loan and closing costs are paid.
How Much Cash Can You Take Out?
Across the wholesale programs Lendmire places files with, a conventional cash-out refinance is capped at 80% loan-to-value (LTV) on a one-unit principal residence. LTV is the new loan divided by your home’s appraised value. Two- to four-unit principal residences, second homes and investment property cap at 75%, so tell your lender how you use the home up front.
Here is a worked example in percentages. Say your home appraises at 100% of its value and your current balance is 50% of that. At an 80% cap, the new loan can reach 80%. Subtracting the 50% balance leaves a gap of 30% of the home’s value, which is the most the loan could pay out before closing costs come off the top. Costs shrink that number. A lender may also set the loan lower based on your credit and debt.
One wholesale lane goes further. It reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% total debt ratio, a thirty-year fixed rate, a primary residence and a conforming loan balance. It carries its own six months of seasoning. That makes it the one exception to the usual rule that mortgage insurance applies above 80% LTV on agency loans. Not every borrower fits it, and it is not written in Texas. Leverage and reserves vary by lender and program; the final terms follow the full file review.
Texas has its own rule. A cash-out loan on a Texas homestead (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution.
What Do Lenders Check Before Approving One?
Cash-out is a full-underwriting loan. Nothing about it is a streamline. The lender looks at your credit, income, assets and debts, then orders an appraisal. The appraisal fixes your home’s value, and value sets the loan limit.
- Equity left after the new loan. Keeping more of your home’s value makes the file easier.
- Credit score. The wholesale conventional programs start at a 620 decision score. The automated underwriting finding governs most files.
- Debt-to-income ratio (DTI). This is your monthly debts divided by your monthly income. The total ratio ceiling on the programs described here is 50%.
- Seasoning. This is the waiting period on your current loan. The mortgage being paid off must be at least 12 months old, and at least one borrower must have been on title for 6 months. Exceptions exist for inheritance, legal awards and delayed financing.
- Occupancy. Primary home, second home and investment property each carry a different leverage limit.
- Reserves. Cash left after closing may be required on some files. Fannie Mae’s Eligibility Matrix ties minimum reserves on automated cash-out files to higher debt ratios.
The same matrix lists different limits for one-unit homes, two- to four-unit homes, second homes and investment property. It is the live source for the conventional leverage caps, so check it when you want the current numbers.
Which Programs Offer Cash-Out, and Which Do Not?
Conventional loans are open to any owner with equity, subject to the limits above. FHA loans need an FHA-approved lender. VA loans need a Certificate of Eligibility.
On the VA side, VA’s cash-out loan page says it plainly: you get a VA-backed cash-out loan through a private bank, mortgage company or credit union, not directly through VA. The page also says a VA cash-out can refinance a non-VA loan into a VA loan. It lists uses such as paying off debt, school and home improvements.
Now the part many borrowers get wrong. The FHA Streamline and the VA IRRRL are not cash-out products. They exist to refinance an existing government loan, with limited review and a net tangible benefit test. They do not put cash in your pocket. A refinance is also not cash-out. It pays off your first mortgage, the closing costs and a purchase-money second lien, with only incidental cash back. Fannie Mae’s limit on that cash back is the lesser of 2% of the new loan amount or $2,000. Freddie Mac’s is the greater of 1% of the new loan amount or $2,000.
If you want cash for a big bill, you need a true cash-out loan.
What Large Expenses Can It Cover?
Lenders do not put many limits on how you spend a cash-out. Typical uses include home repairs, tuition, medical bills, paying off other debts, and a big one-time cost. VA’s page names debt payoff, school and home improvements.
Whatever the use, the standard LTV limits still apply, and the lender sets the final terms. Confirm the current rules with your lender, since every parameter is subject to lender guidelines and full file review.
Is It the Right Tool for This Expense?
It depends on the size of the expense, how long you will carry the debt, and what your current loan looks like. Here is how the four common choices compare.
| Tool | How it works | Best fit |
|---|---|---|
| Cash-out refinance | Replaces your first mortgage with a larger one | One large, planned expense |
| HELOC | Revolving credit line beside your mortgage | Costs spread over time |
| Home equity loan | Fixed second loan beside your mortgage | One lump sum, keep your first loan |
| Personal loan | Unsecured loan, no home as collateral | Smaller amounts, no equity needed |
The decision usually comes down to your current mortgage. If it is a good one, replacing it just to raise cash may cost you more than a second loan alongside it. If your current mortgage no longer fits your budget anyway, a cash-out refinance can do two jobs at once.
Fair warning: it is a bigger commitment than it looks. The CFPB’s guide to using home equity says a cash-out refinance may extend the time it takes to pay off the mortgage, and the monthly payment may rise because a larger loan replaces the current one. It also notes that lenders typically require you to keep at least 10% to 20% of your home value as equity. That lines up with the 80% cap on conventional cash-out loans.
What Does It Do to Your Credit?
The news is mixed, and it is better than most people expect. The CFPB’s report on cash-out borrowers followed borrowers from 2014 to 2021. It found an initial sharp improvement in scores, then a gradual slide, though scores stayed above where they started. Many borrowers used the money to pay down other debts, particularly credit card and auto loan debt. Card balances drifted back toward earlier levels the next year but did not fully return.
Read that carefully. It shows what happened on average, not what will happen to you. Paying off a card with home equity moves the debt onto your house. If the card balance builds again, you end up with both.
What Does It Cost?
Closing costs apply to a cash-out refinance, just as they do to any new mortgage. The Loan Estimate and the Closing Disclosure show them line by line. Compare them across lenders.
Watch for the “no-cost” label. It does not mean nothing is paid. The costs get folded into the interest rate or into a larger loan balance. That can still be the right call, but it is a trade, not a gift.
On the conventional side, a loan-level price adjustment can apply to certain cash-out loans. It depends on your LTV and credit score. Mortgage insurance is a separate piece, and it matters mainly if you go above 80% LTV. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Be careful with offers that arrive unasked. VA itself warns borrowers to be careful with home loan refinance offers.
Who Should Skip It?
Skip it, or at least pause, in these cases:
- You have a mortgage you like and need a small amount of cash. A second loan or a line of credit may cost less.
- You are close to paying off your home and the new term would restart the clock.
- The expense is something you can cover from savings over a short stretch.
- You would be borrowing near the top of the limit with little room left if values dip.
It tends to make sense when the expense is large, planned and worth more than the added cost. A big home repair that adds value is one example. Consolidating high-balance debt, with a plan not to rebuild it, is another.
Questions to Ask Any Lender
Bring this list to every conversation:
- Which programs do you offer for cash-out, and which fits my file?
- What is the maximum LTV for my occupancy type?
- Does a no-mortgage-insurance option exist for my balance and score?
- What does my Loan Estimate show in total closing costs?
- Will a price adjustment apply to my loan?
- Does my current loan meet the seasoning period?
- What reserves will you need to see?
Get answers from at least two sources in writing. A broker can pull several of those answers at once.
How the Process Runs, Step by Step
1. Check your equity. Estimate your home’s value and subtract your loan balance.
2. Decide how much cash you need, and how much you can comfortably repay.
3. Gather income, asset and debt records.
4. Compare programs and Loan Estimates.
5. Go through full underwriting and the appraisal.
6. Review the Closing Disclosure and sign.
Your lender or broker will walk you through the timing of each step for your file.
What If You Are Turned Down?
A decline is not the end of the road. Common fixes include lowering the amount you ask for, paying down other debt to improve your DTI, waiting out a seasoning period, or switching to a program that fits your score. A home equity loan or line of credit can also fill the gap if a cash-out falls through. If you were declined for credit reasons, ask which factor drove the decision, and fix that one first.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches.
Key Terms Defined
Cash-out refinance: A new mortgage larger than your current one. It pays off the old loan, and you receive the extra as cash.
Loan-to-value (LTV): The new loan amount divided by your home’s appraised value, shown as a percentage.
Seasoning: The waiting period on a loan or on your ownership before a lender will allow a cash-out.
Debt-to-income ratio (DTI): Your monthly debt payments divided by your gross monthly income.
Mortgage insurance: Coverage that protects the lender when you borrow above 80% LTV on an agency loan. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Equity: The part of your home’s value you own, which is value minus what you owe.
Frequently Asked Questions
Can any bank give me a cash-out refinance?
Most banks, credit unions and mortgage companies can, though each sets its own programs. Credit unions may require membership. Some lenders do not offer every loan type, such as VA or jumbo, so ask before you apply.
Does the government give you the money for a VA or FHA cash-out?
No. VA and FHA back or insure the loan, and a private lender makes it. VA’s own page says you get a VA-backed cash-out loan through a bank, mortgage company or credit union.
Can I use an FHA Streamline or VA IRRRL to take cash out?
No. Both are streamline refinances of an existing government loan, built to lower your costs, not to hand you cash. You need a true cash-out loan for that. Ask your lender which program fits your existing loan.
How much equity do I need to keep?
On a conventional one-unit primary home, the cap is 80% LTV, so you keep at least 20% equity. Two- to four-unit homes, second homes and investment properties cap at 75%. A Texas homestead is capped at 80% by state law. Subject to lender guidelines and file review.
Is a cash-out refinance the same as a HELOC?
No. A cash-out refinance replaces your first mortgage with one new loan. A HELOC is a separate credit line that sits beside your mortgage. Each has different costs, so compare them for your expense.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Eligibility Matrix
2. VA: Cash-out refinance loan
3. CFPB: Using home equity guide
4. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Top Cash-Out Refinance Providers to Cover Major Expenses · Letter of Explanation vs Letter of Intent for a Cash-Out Refinance · How to Get a Cash-Out Refinance With Multiple Financed Homes
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.